Originally created 03/10/02

A family business



Losing his job a few weeks before Christmas wasn't a harsh blow for Thomas C. "Tommy" Poteet.

That's because leaving his employer - the Canadian corporation that bought his family's funeral home business 10 years ago - means he is free to go back into business for himself.

"Everything has worked out perfect," said Mr. Poteet, who expects to open a new funeral home in May on Davis Road, in the building formerly occupied by West Augusta Baptist Church.

Thomas C. "Buzz" Poteet Jr. will work along with his father at the new business, which will be called Thomas C. Poteet and Son Funeral Directors.

The three Poteet Funeral Home locations the Poteet family had built over the decades are still owned by Alderwoods Group Inc. of Toronto, North America's No. 2 funeral service company, formerly known as The Loewen Group.

Mr. Poteet's father, Henry, opened the first Poteet Funeral Home on Greene Street in 1934. Over the years, the business expanded to Peach Orchard Road in south Augusta and Wheeler Road in west Augusta.

Like its competitors, the Poteet funeral home was run as the family business. But the late 1980s brought a new trend to the funeral home industry: consolidation.

Large corporations such as Loewen, Houston's Service Corporation International and Stewart Enterprise Inc. of Metairie, La., began buying independently owned funeral homes in an attempt to build cost-efficient national networks.

The Loewen Group courted Poteet Funeral Home for two years.

"They would put anything in the contract to get you to sell," Tommy Poteet said.

Henry Poteet died in 1991. That same year, his wife, Annabel, and sons Howard and Tommy decided to sell to Loewen after it made an offer too good to pass up.

OTHER INDEPENDENT FUNERAL directors in the area sold their businesses during the death-care industry's acquisition-crazy years of the late 1980s and early 1990s. Loewen also bought Augusta's Thomas L. King Funeral Home; Service Corp. International bought Elliott Sons Funeral Home's Augusta operations; Sentinel Group Inc. purchased the J.M. Posey and Sons Funeral Home locations in Aiken County; and Meridian Mortuary Group Inc. of Atlanta bought Deloach Funeral Home in Hephzibah and Waynesboro, Ga.

"Corporations thought of the financial benefits of the death rate increasing as the baby boomers began to die," Buzz Poteet said.

Stock prices and dividends rose as these large corporations bought funeral homes and cemeteries in the United States and throughout the world.

However, the trend has taken a downturn.

Loewen and Service Corp. International, the world's largest funeral services company with 4,400 funeral homes, cemeteries and crematoria in 18 countries, ran into problems in the late 1990s because of the sizable debt racked up during the industry's acquisition binge.

"The pendulum has swung back, so to speak," said Stephen D. Posey, owner of Stephen D. Posey Funeral Home in North Augusta. Mr. Posey's grandfather, J.M. Posey, started a family funeral home business that grew to three locations in North Augusta, Graniteville and Langley, S.C.

J.M. Posey's heirs sold the business in 1988 to a corporation that was later acquired by Loewen, but the businesses were faltering by the mid-1990s. The North Augusta location was eventually bought back by Stephen Posey, and the Graniteville location was purchased by longtime Posey manager Sonny Napier.

Loewen, which changed its name to Alderwoods after emerging from Chapter 11 bankruptcy protection, has focused more on running the funeral homes it has before trying to acquire more.

"I think right now they're focused on paying down debt to improve their credit ratings," said Jennifer L. Childe, a death-care industry analyst for Bear Stearns. "When they get their balance sheets back in order, it is certainly possible they could (begin making more acquisitions)."

But David Walkinshaw, a funeral home operator in Massachusetts and a spokesman for the National Funeral Directors Association, is less optimistic. He said the main reason so many family funeral home owners sold to the big corporations is because they were offered much more than their properties were actually worth during the bidding frenzy of the 1980s and 1990s.

"When the trend was going on, reporters used to ask me, 'are the corporations gobbling up independent funeral homes?"' he said. "I would say an independent funeral home can't be gobbled up unless the independent funeral home wants to sell."

THE POTEETS RESIGNED from Alderwoods immediately after their contract ended in November.

"We're excited," Buzz Poteet said. "We're ready to be on our own and do things the way we want to do them and not have to get permission."

Mr. Napier, owner of Napier Funeral Home, knows what it's like to work for a big death-care provider.

He has worked for several during his four decades in the business. He said independent and corporate homes operate similarly with the exception of flexible pricing.

"They have strict rules and policies," he said. "You can't make any changes unless you get it approved by management."

Mr. Walkinshaw said he has heard anecdotes about funeral directors leaving the big corporations to start new family funeral homes.

"I don't know if you could call it a trend or not," Mr. Walkinshaw said. "It's just something we're starting to see."

The Poteets found out West Augusta Baptist Church was trying to sell its 8-acre parcel on Davis Road in order to move to Columbia County, where most of its congregation is now.

The building is undergoing renovations. The sanctuary will become a 250-seat chapel. A 63-foot-by-50-foot area that served as classrooms will become visiting areas. One of the areas that will be left untouched is the church's nursery, which will be used by Buzz Poteet for his children Isabella, 4, and Thomas III, 2, and will be available to families who are planning or attending funerals.

The funeral home will occupy the front two acres of the property, and the remainder will be developed into a 39-unit professional office park.

The tentative opening date is Tuesday.

Tommy and Buzz, both of whom are licensed funeral directors, have kept busy conducting funerals at funeral homes whose directors have allowed them use of their facilities.

Although the Davis Road location is not open, the Poteets are already looking at developing other locations.

"A lot of people in south Augusta will follow us here, but we have already decided we are going to have to expand," Tommy said.